AS THE Hang Seng Index approaches the 8,000 level, investors would be excused for thinking the Hong Kong stock market is a little too hot to handle. Indeed, at the beginning of summer, few predicted the index would reach current levels; a slow summer sell-off seemed far more likely.
While there are words of caution around the industry, the underlying sentiment seems to be bullish. Perhaps, it is worth buying on any signs of weakness.
Yet, the market seems to be defying the laws of gravity. The concerns which caused a stock sell-off at the end of last year still remain. China and Britain have yet to sort out their differences over Hong Kong's political future.
In addition, major infrastructure projects, such as the new airport and Container Terminal 9, remain as uncertain today as they were this time last year.
On top of these familiar problems, there are new spectres haunting the market. It still looks possible that China's runaway economic growth could defy attempts to rein it in.
While there have been positive signs - for example, the stabilisation of the exchange rates and the growth in deposits - the latest inflation figures show that China's economy is not out of the woods yet.
And as for China's paramount leader, Deng Xiaoping, has anybody seen him recently? Nevertheless, there is the feeling you could go away for three weeks' time and come back to see the Hang Seng Index at 8,000.